The influx of parallel traders who buy their stock tax-free in Hong Kong to resell it in mainland China at a profit is causing growing unrest. Residents of Sheung Shui, a town close to China's border, say the increase in parallel importers has pushed up retail prices and causes a general nuisance. Importers argue that their trade benefits the Hong Kong economy.

Up to 150 people cross the checkpoints between Hong Kong and Shenzhen more than twice each day, according to a new system implemented last month by the Shenzhen customs.

The system - introduced on July 10 to help the authorities identify and crack down on illegal parallel-goods traders - flashes a green light each time it detects a traveller crossing a checkpoint for the third time within a day.

Customs officials might then request to check the person's belongings, and additional taxes would be charged if the total value of the goods found on them exceeded 5,000 yuan (HK$6,280) for mainlanders and 2,000 yuan for Hongkongers.

Yesterday, several members of the Democratic Alliance for the Betterment and Progress of Hong Kong visited the Shenzhen customs to learn more about the new system.

Quoting a customs official, lawmaker Gary Chan Hak-kan said: "An average of 150 people have been detected by the 'light flashing system' every day since it was implemented. Around 60 of them each day are found to be parallel-goods traders."

Among those caught, the ratio of Hongkongers to mainlanders was 10 to 1, said Chan.

He expressed his support for the new system, saying that the border-crossing process yesterday was smoother than before, and that he believed parallel-goods trading activities had decreased. He added that the system had expanded its operations to all five border checkpoints.

The goods confiscated by the customs officials were mainly smartphone cases, rather than infant formula. This reflected the effectiveness of the Hong Kong government's two-tin ban on travellers leaving the city with baby formula, Chan said.

This article appeared in the South China Morning Post print edition as 150 potential smugglers detected daily